Ryan Cohen's mysterious bank letter backing his eBay bid reveals a big issue
CNBC • • business
Key Points:
- GameStop's $56 billion bid for eBay hinges on a $20 billion financing commitment from TD Securities, which requires the combined company to maintain an investment-grade credit profile.
- Moody's Ratings warned the acquisition would be "credit negative" for eBay, estimating leverage could reach nine times debt to EBITDA, likely pushing the company below investment grade.
- The high indebtedness level threatens the key condition of the TD financing package, casting doubt on the deal's feasibility.
- GameStop's market value is around $11 billion, significantly lower than the bid, raising questions about how the deal will be financed; CEO Ryan Cohen mentioned the possibility of issuing additional stock.
- eBay confirmed receipt of the offer and stated its board will review it, while media reports have highlighted the mysterious nature of the financing letter.
